Is the Wisconsin film tax credit worth it?

It may be impossible to assess the value of Johnny Depp's dashing presence in the streets of Madison. According to the State of Wisconsin, however, it could be worth up to $500,000 in tax credits. Public Enemies was the most prominent of the many films that benefit from tax breaks meant to lure Hollywood filmmakers to the land of frozen tundra.

Today, the Joint Finance Committee deadlocked on whether to reduce the maximum film credit from $500,000 to $324,000. All four committee Democrats voted with four Republicans in supporting the status quo, while eight Republicans apparently supported reducing the credit.

There's little evidence that the film tax credit should exist at all. A cost-benefit analysis of the policy in 2009 showed that at best a major production like Public Enemies netted the taxpayers of Wisconsin $400,000 and it likely had a net negative fiscal impact.

The most offensive aspect of the tax credit is that it is refundable, meaning the state not only reduces a film company's tax liability to $0, but if the grant exceeds the company's tax bill, the state will pay out the difference in the form of a big cash subsidy. Louisiana got into big trouble with a similar program. The generous incentives it offered the production of Benjamin Button turned into a $27 (not $270) million bill for the state.

You'd think that a cap on the tax credit, which Wisconsin currently has, would prevent that from happening. I don't quite understand why that is not the case. I can't get a hold of the Commerce Department at this time.

The Commerce study pointed out that similar incentives were offered to traditional companies, such as Harley Davidson, the state would quickly be broke (a sharp distinction between Scott Walker's understanding of "broke"). Harley Davidson, for instance, would have been eligible for $903 million in tax credits in 2009.

Two thirds of the corporations in this state don't pay taxes at all, but again, a refundable tax credit means the state will be doling out cash like the pentagon.

The defense of the program, as I see it, stems from two arguments. First, if any economic benefit to the state can be foreseen, then a generous subsidy may be the only way to entice film crews to Wisconsin, since just about every other state has been engaged in a vicious rat race to give welfare to Hollywood. Second, there is the cultural element. Can the production of a film in Wisconsin promote the state, its natural beauty, its cities, etc?

Here's an idea. Offer tax credits to companies who will shoot films that are set in Wisconsin, rather than to those who use Wisconsin as a stage for another location. Never, for instance, should a movie that takes place in Minnesota be subsidized to shoot in Wisconsin. It's imperative that every viewer knows that those inviting blue lakes in the background are ours, not theirs.

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